October 23, 2007

Rising travel costs predicted for 2008

If you're a business traveler, chances are you'll be paying more to take that trip in 2008, according to the latest travel forecast by American Express.

The average domestic business trip that includes round-trip airfare, a hotel room and a rental car will grow six percent, or $63, to a total of $1,110.

"Travel managers and procurement professionals can expect another capacity-restricted, challenging year and a continued push to keep travel and entertainment budgets in check," said Mike Streit, vice president and global leader for American Express Business Travel Advisory Services. "However, opportunities still exist to further control costs without curtailing business travel."

He suggested there were five ways for companies to keep travel costs down:

Lowering use of refundable airfares

Optimizing use of advance purchase fares

Defining more narrowly when first- and business-class fares can be used

Driving online bookings

Improving use of preferred suppliers, especially hotels where compliance has historically hovered around 50 percent.

Airfares will steadily creep up for the same reasons that pushed them up in 2007: rising fuel costs and decreased capacity. But in some markets, the survey says that more competition and the presence of low-cost carriers should help fares from rising too much.

Hotels prices will rise because demand is outpacing supply in many major cities.

And if your business travel takes you out of the country, American Express expects the average trip including airfare, hotel and rental car to grow 7 percent from last year, or $205, to a total of $3,171.

The report suggests: "focusing on meetings as an area of savings will help drive down T&E expenses."